LensCrafters 2007 Annual Report Download - page 126

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| 125 <
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization. Luxottica Group S.p.A. and its subsidiaries (collectively “Luxottica Group” or the
“Company”) operate in two industry segments: (1) manufacturing and wholesale distribution and
(2) retail distribution.
Through its manufacturing and wholesale distribution operations, Luxottica Group is engaged in the
design, manufacturing, wholesale distribution and marketing of house brand and designer lines of
mid to premium-priced prescription frames and sunglasses, and, with the acquisition of Oakley Inc.
(“Oakley”) in November 2007, the Company, through various Oakley subsidiaries, is a designer,
manufacturer, and worldwide distributor of performance optics products.
Through its retail operations, as of December 31, 2007, the Company owned and operated 5,885
retail locations worldwide (5,280 locations at December 31, 2006) and franchised an additional 522
locations (439 locations at December 31, 2006) principally through LensCrafters, Inc., Sunglass Hut
International Inc., OPSM Group Limited, Cole National Corporation (“Cole”) and Oakley. The retail
division of Oakley (“O” retail) consists of owned retail locations operating under various names
including “O” stores which sell apparel and other Oakley branded merchandise in addition to
performance sunglasses. At December 31, 2007, our retail operations by geographic region and
significant trade names were as follows:
Luxottica Group’s net sales consist of direct sales of finished products manufactured under its own
brand names or licensed brands to opticians and other independent retailers through its wholesale
distribution channels and direct sales to consumers through its retail segment.
Demand for the Company’s products, particularly the higher-end designer lines, is largely
dependent on the discretionary spending power of the consumers in the markets in which the
Company operates.
The North America retail division’s fiscal year is a 52- or 53-week period ending on the Saturday
nearest December 31. The accompanying consolidated financial statements include the operations
of the North America retail division for the 52-week periods ended January 1, 2006, December 30,
2006, and December 29, 2007.
Principles of consolidation and basis of presentation. The consolidated financial statements of
Luxottica Group include the financial statements of the parent company and all wholly or majority-
owned subsidiaries. During 2007 a subsidiary of the Company located in the United States
acquired an additional 26% interest in an affiliated manufacturing and wholesale distributor,
located and publicly traded in India, in which it previously held an approximate 44%. Until the time
that the Company became the majority shareholder, this investment was accounted for under the
equity method. The Company owns a 50% interest in an affiliated company located in Great Britain
NOTES
TO CONSOLIDATED
FINANCIAL STATEMENTS
North America Europe Australia China Others Total
Middle East New Zealand Hong Kong
South Africa
LensCrafters 951 165 1,116
Sunglass Hut 1,738 110 287 6 2,141
Pearle and Licensed brands 1,815 1,815
OPSM Group 551 551
Oakley 107 39 146
Others 32 84 116
Franchised locations 414 108 522
5,025 110 978 255 39 6,407